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Dr. Dane Christensen
Associate Professor of Accounting | Charles E. Kern Research Scholar
Lundquist College of Business
University of Oregon

We examine the flow of value-relevant information between U.S. Senators that interact in the course of their employment, and the potential career benefits that accrue to sharing information. We use physical distance between two Senators’ desks in the Senate chamber to capture the proclivity to share information. We predict and find that when two Senators sit closer together, they are more likely to trade stocks in the same industry within a short window and earn larger buy-and-hold returns on those trades. This association is strongest when the two Senators belong to the same political party, consistent with the tendency to interact with similar people. Additional analyses suggest that Senators share information gleaned from their committee work, but are less likely to share information during periods of greater scrutiny by the Senate Ethics Committee. Moreover, we find that Senators with stronger career incentives (those in less powerful positions) are more likely to share information with relatively more powerful Senators. Finally, we examine one career benefit associated with sharing information: an increase in the power of the Senator’s position within the party. We document that the number and percentage of powerful committees the Senator is assigned to is associated with the extent of information shared and co-trade profits earned by other Senators in the prior Congressional session. Taken together, our results support recent calls for restrictions on Senatorial trading in individual stocks.